Good News & Bad News, page-1755

There's always an ulterior motive for Instos issuing Price Targets. Especially Macquarie as we engage them for Corporate financial activities.

I recall earlier this year, Macquarie raising their Price Target for PLS. I think they raised it twice in a matter of weeks. It was just before CITIGROUP slapped PLS with a "sell" rating. That caused our share price to fall from $1.32 back to $1.11.

We have financing for the POSCO DSJV about to be released. With it ... comes news of the FID and financing for the Pilgan plant Stage 2 expansion. Any equity part is going to be based on the PLS share price vwap. This would certainly affect the POSCO Chem Convertible Note issue. I don't see any CR coming apart from that. It was always part of the DSJV investment plan. No surprise there.

Still our Finance Director converting and selling her options before hand, makes one think.

PLS signalled in the last ASX Ann. a possibility of a rearrangement of our debt finance facility to accommodate future plans. The Yibin Tanyi prepayment was used for the Pilgan 30 to 50ktpa expansion. Current cash/profits are funding the Ngungaju refurbishment.

Its possible the share price may be in for a ride either way. I feel comforted in that I took 30% off the table.

Still, that 109kt in Sales for the Jun21 quarter would've been at Spodumene prices between US$650 and US$800. I'd therefore hope that it generated cashflow of between A$30 to A$50m for the quarter.

I was hoping for an early ASX Ann. trumpeting the cash balance at 30Jun21. However, with the current pricing mechanism, there may be a fair portion of sales revenue not coming until the Sep21 quarter. Also, that Yibin Tianyi prepayment of A$15m arrived in the previous quarter, while the outgoings in the Jun21 quarter.

After non cash items are accounted for, I wasn't expecting a NPAT in the 2021 Annual A/Cs ... but a good result for the Jun21 quarter, may just get us there. Profit declarations can be the trigger for bigger things in the share price. I fully support @Whisky49 sober comments pointing out the sizeable MC of this Company, despite its record of profitability. Just as the Tesla share price exploded when they demonstrated their profitability, its not inconceivable that the market may feel justified that our share price may command a P/E reflective of much higher Spodumene prices, plant expansions and downstream investment(s). I estimate we have a P/E of ~40 based on notional earnings NOW. Given our position in a disruptive industry, could the market now award us a triple figure P/E like Ganfeng? A Spodumene price of US$1,000pt would bring the P/E down to ~30. More?

Come in spinner.

Deal the cards.

https://www.youtube.com/watch?v=jvm45cWLRZM&list=PLWv30cVuKIGEoYfvqfhVnG2GLzbVs9CT_&index=1

If I was trading this, the Finance Director selling a very large parcel of shares prior to a financing announcement, would be good reason to sell.

Then again, the declaration of profitability aspect (and perhaps Spodumene price increases) may just well be a good reason to hold.